WASHINGTON – New orders for U.S.-made capital goods in June signaled that some businesses were still spending, despite headwinds from the credit crunch and housing recession.

New orders for durable goods rose 0.8 percent in June, pushed higher by orders for primary metals, machinery and electrical equipment, the Commerce Department reported Friday.

Orders in May were revised to a 0.1 percent gain, compared with no change estimate previously.

Economists surveyed by MarketWatch were looking for a 0.3 percent fall in durable goods orders in June. See Economic Calendar.

Durable goods are big-ticket items designed to last three years or more. As such, new orders are very sensitive to economic expectations and serve as useful leading indicators of growth.

Much of the increase in June was defense-related. Defense orders rose 12 percent, according to Ian Shepherdson, chief U.S. economist at High Frequency Economics. Total orders, excluding defense, were up only 0.1 percent.

“Overall, then, not a bad report, but with orders ex-defense falling at a 4.0 percent annualized rate in the second quarter, it’s pretty clear manufacturing is hardly thriving,” Shepherdson said.

Demand in June was held back by a 25.1 percent drop in orders for civilian airplanes. Excluding the extremely volatile transportation category, orders were up 2.0 percent in June, after falling 0.5 percent in May. Read full survey.

Orders for core capital equipment goods – the best monthly gauge of business investment – rose 1.4 percent after a 0.1 percent fall in May.

The report lends support to indicators showing factory activity continuing despite the slowdown in housing and troubles in the financial sector. Export orders have been buoyed by a weaker dollar.

Shipments of durable goods rose a healthy 0.5 percent following a 1.2 percent fall in May. Shipments of core capital equipment – which are factored directly into calculations of gross domestic product – increased 0.7 percent in June.

Inventories rose 0.5 percent in June, for the 11th monthly rise over the past year.

Unfilled orders – a sign of future production – rose 0.9 percent, matching May’s gain. Excluding transportation goods, unfilled orders rose 1.2 percent

DETAILS OF DURABLES REPORT

• Orders for primary metals rose 5.1 percent after falling 1.8 percent. Shipments rose 2.8 percent after 1.4 percent.

• Orders for fabricated metals rose 1.7 percent after a 0.3 percent drop in May. Shipments rose 0.6 percent after a 0.4 percent fall.

• Orders for electrical equipment rose 5.0 percent after 2.0 percent. Shipments fell 0.4 percent after a 0.4 percent gain.

• Orders for machinery rose 2.3 percent after shrinking 3.7 percent in May. Shipments rose 2.4 percent after 0.1 percent.

• Orders for transportation goods fell 2.6 percent after growing 1.9 percent. Shipments rose 1.4 percent after falling 3.8 percent.

• Orders for computer equipment (excluding semiconductors) fell 1.1 percent after jumping 2.8 percent. Shipments (including semiconductors) fell 1.1 percent after rising 2.8 percent.


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